Reuters reports that Volkswagen has announced its second production halt in less than six months, saying it will idle European plants over the Easter holiday to meet overcapacity and slowing demand.

The report says that the move will cut output cut by some 15,000 vehicles and adds that the five-day production halt follows a week-long stoppage last autumn which VW launched to prevent a build up of inventory amid fears over the outlook for car sales following September 11.

In a statement VW said the move was intended to prevent a build-up of inventories amid growing pressure from overcapacity and price competition.

Volkswagen this week announced an 18.6 per cent increase in 2001 pre-tax profits over the previous year, although analysts said the figures indicated a deterioration in the final three months of the year.

In January (2002), Volkswagen brand passenger car sales in Western Europe declined by 15.1%, apparently due to the impact of newer models, such as the Peugeot 307, in the Golf segment.